Mutual Funds Rake in Fees at over $8 Million Per Hour

According to the Investment Company Institute the combined assets (stock, bond and money market funds) of the nation's mutual funds is $8.125 trillion at the end of February 2005. The total annual fees charged by the mutual fund industry to manage and administer their funds is $75.80625 billion if you assume that the weighted expense ratio for all funds is 0.933.

$75.80625 billion is a lot of money. It works out that in one year mutual funds brings in the equivalent of $6,317,187,500 per month, $207,688,356 per day, $8,653,682 per hour, $144,228 per minute or $2,404 per second. For these fees mutual funds market their funds, administer them and managed funds buy and sell selected securities.

Fees are charged every year whether a fund increases or decreases in value. So you still pay fees in a year when your fund goes down in price. And any fee that you pay reduces your total return by the amount of the fee.

To minimize the fees that you pay, buy low-cost index funds or exchange traded funds (ETFs). Avoid most managed mutual funds.